An interview with the Co-Chairs of the new GDPRD Thematic Working Group on Sustainable and Blended Finance for Food Systems.
Tuleen Alkhoffash is the Senior Portfolio Manager in the Private Sector Operations Division at the International Fund for Agricultural Development (IFAD).
Songbae Lee is the Agri-Finance Lead at the USAID Bureau for Resilience and Food Security.
Michelle Tang/GDPRD: Congratulations on becoming the first Co-Chairs of the Thematic Working Group on Sustainable/Blended Finance for Food Systems. What inspired you to take on these roles?
Tuleen Alkhoffash/IFAD: We needed a group that could bridge between the donor community, United Nations (UN) organizations, impact investors and philanthropists, as we can be very disconnected from each other. We wanted to bring these parties together to create something different and focus on one goal.
Songbae Lee/USAID: This is not a role I would have expected. I often joke that my top achievement working in government was killing a working group I co-chaired. But there are key differences with this group. First, is the timing. I still have a knee jerk reaction to working in groups but also appreciate more the value in working with other donors. Working together is harder, takes longer, and can be a frustrating experience, but necessary if you want to move the needle.
Second, I have gotten to know some of my counterparts at other donor agencies and like them. Something that I think is often overlooked is the need to build relationships and trust before you try to work together.
Lastly, the host. I first began thinking that the Global Donor Platform for Rural Development (GDPRD) is not your typical platform ever since participating in your 2023 Annual General Assembly. Your convening power, organizational abilities, and selection of topics discussed surprised and impressed.
The Co-Chairs at the Agri-SME Learning Collective (ASLC) Annual Convening in Utrecht, The Netherlands (October 2024).
We needed a group that could bridge between the donor community, United Nations (UN) organizations, impact investors and philanthropists, as we can be very disconnected from each other.
Carlotta Cramer/GDPRD: Why is sustainable blended finance critical for addressing global security challenges? What opportunities does it present?
Songbae: The argument I typically hear is that we have these huge challenges in the world and donor funding isn't enough. We have large commercial capital markets so let's rechannel that capital to these issues.
The challenge is that many people only consider the size of the funding gap and the amount available in the capital markets. Even if we were to redirect all existing donor funding to blended finance, it wouldn't be enough to fill that gap. So, it is important to understand which portion of that gap can be incrementally addressed through blended finance. We need better data on our current work and more rigorous impact assessments.
For blended finance to have a transformational impact, it must show evidence of how it works to eventually influence government policies. Most of that gap will need government involvement to fully address the issue.
Tuleen: Investing in food security and the agricultural value chain is risky. Farmer profit margins are low, and climate change can lead to sudden floods or droughts that would jeopardize business.
The data we present in our working group shows that agri-business is a major employer in many countries but faces limited access to finance in comparison to other sectors. We firmly believe that addressing global security challenges, especially food security, requires blended finance and the active role of the private sector in investing more in the value chain of agri-business.
The Co-Chairs with Brian Milder, Founder and CEO of Aceli Africa and ASLC Steering Committee member, and Eda Dokle, Coordinator of the ASLC and CSAF Data & Learning Manager, in Utrecht, The Netherlands (October 2024).
For blended finance to have a transformational impact, it must show evidence of how it works to eventually influence government policies.
Michelle: What sets this working group apart?
Songbae: It's the timing, given the recent discussions on a learning agenda for agri-SME finance with other bilateral donors and with the newly formed Agri-SME Learning Collective. This working group provides an opportunity to bring these different streams together even if they only partially overlap. I feel like we can really develop something that will be useful for donors specifically and the sector more broadly.
Carlotta: What led to the creation of this working group?
Tuleen: The need for such a working group arose from a recommendation identified in a 2023 enquiry conducted by the GDPRD and the Shamba Centre for Food & Climate, to which the GDPRD responded by establishing this group in March 2024.
We wanted to be part of what we could do better in blended finance, so we decided to formulate the group on that basis. For Songbae and myself, we wanted to establish the group with specific deliverables that would allow different parties to contribute to a single outcome, which is the framework we are currently developing with Aceli Africa and the Agri-SME Learning Collective.
We wanted to establish the group with specific deliverables that would allow different parties to contribute to a single outcome.
Carlotta: What are the main challenges in scaling up sustainable blended finance, and how does the working group plan to address this?
Tuleen: Donors tend to receive a lot of data from different parties, each with a different set of parameters for guarantees and loss. When donors become part of the exercise to design and interpret data, they may look at it through a different lens. This is where we can add value for donors when they plan and decide on their annual budget cycles.
From my USAID experience, donors have internal sector and finance teams which can lead to debates between financial and development objectives. Finance teams often focus on the risk parameters whereas development teams prioritize other numbers such as job creation, rural poverty, and the inclusion of women. This working group allows donors to bring those two perspectives together.
Michelle: What is the one message you would like our readers to take away?
Songbae: I’ve realized that I prefer not to work on activities that are not also funded by another donor. If you believe an activity is worth supporting, a good indicator you may be right is to see if you can convince another donor to join. This not only provides validation but also brings in additional resources. I'm not saying everyone has to do everything together, but that’s where I plan on spending most of my time going forward such as on this working group.
Learn more about the new thematic working group and the report that recommended its creation.
